DoD's $41.4M contract for canned fruits and vegetables shows fair value with 3 bidders

Contract Overview

Contract Amount: $41,430,556 ($41.4M)

Contractor: Baxters North America, Inc.

Awarding Agency: Department of Defense

Start Date: 2010-10-28

End Date: 2020-03-31

Contract Duration: 3,442 days

Daily Burn Rate: $12.0K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: TAS::97 4930::TAS

Place of Performance

Location: CINCINNATI, HAMILTON County, OHIO, 45242

State: Ohio Government Spending

Plain-Language Summary

Department of Defense obligated $41.4 million to BAXTERS NORTH AMERICA, INC. for work described as: TAS::97 4930::TAS Key points: 1. The contract achieved a reasonable price point given the duration and scope. 2. Competition was robust, indicating effective market engagement by the agency. 3. Performance risks appear manageable, with a firm fixed-price structure. 4. This spending aligns with historical defense logistics support for food supplies. 5. The contract falls within the broader food manufacturing and distribution sector.

Value Assessment

Rating: good

The total award of $41.4 million over approximately 9.4 years suggests a consistent annual spend of around $4.4 million. This appears to be a fair valuation for a sustained supply of essential food items to the military. Benchmarking against similar large-scale food procurement contracts indicates that pricing was likely competitive, especially considering the firm fixed-price nature which transfers some risk to the contractor.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'Full and Open Competition After Exclusion of Sources,' indicating that while initial sources might have been considered, the final award was made through a competitive process open to all eligible bidders. With 3 bidders participating, the level of competition was adequate, suggesting that the agency was able to solicit and receive multiple proposals, which generally aids in price discovery and achieving a fair market price.

Taxpayer Impact: A competitive process with multiple bidders helps ensure that taxpayer dollars are used efficiently by preventing inflated pricing and encouraging cost-effective solutions.

Public Impact

Military personnel and their families benefit from a consistent supply of essential food items. Services delivered include the provision of canned fruits and vegetables for commissaries and dining facilities. The geographic impact is primarily within the United States, supporting military installations. Workforce implications include jobs in food processing, packaging, and logistics for the contractor and its suppliers.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for supply chain disruptions impacting delivery schedules.
Ensuring consistent quality and nutritional standards across all deliveries.
Managing price fluctuations in raw agricultural commodities over the contract's long duration.

Positive Signals

Firm fixed-price contract limits cost overruns for the government.
Multiple bidders suggest a healthy competitive market for these goods.
Long-term nature of the contract provides supply chain stability for the DoD.

Sector Analysis

This contract falls within the broader food manufacturing and distribution sector, specifically focusing on canned goods. The market for supplying food products to government entities is substantial, with significant players often competing for large-scale contracts. The Defense Logistics Agency's role highlights the government's consistent need for such provisions to support military operations and personnel worldwide. Comparable spending benchmarks would involve other large federal food procurement contracts.

Small Business Impact

The data indicates that this contract was not specifically set aside for small businesses, nor does it appear to have explicit small business subcontracting goals mentioned. The prime contractor, BAXTERS NORTH AMERICA, INC., is likely a larger entity. This means the direct impact on the small business ecosystem may be limited unless the prime contractor actively engages small businesses in its supply chain.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Logistics Agency (DLA) through contract officers and quality assurance personnel. Accountability measures are embedded in the firm fixed-price structure, requiring the contractor to meet specifications and delivery schedules. Transparency is generally maintained through contract award databases, though specific performance metrics might not be publicly detailed. Inspector General jurisdiction would apply in cases of fraud or significant mismanagement.

Related Government Programs

Defense Logistics Agency Food Procurement
Military Food Service Contracts
Federal Food Supply Chain Management
Department of Defense Commissary System

Risk Flags

Long contract duration may expose government to price changes if market conditions shift significantly.
Potential for quality degradation over extended storage periods if not managed properly.
Dependence on a single contractor for a critical supply item could pose risks if performance falters.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $41.4 million to BAXTERS NORTH AMERICA, INC.. TAS::97 4930::TAS

Who is the contractor on this award?

The obligated recipient is BAXTERS NORTH AMERICA, INC..

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Logistics Agency).

What is the total obligated amount?

The obligated amount is $41.4 million.

What is the period of performance?

Start: 2010-10-28. End: 2020-03-31.

What is the historical spending trend for canned fruits and vegetables by the Department of Defense?

Historical spending data for canned fruits and vegetables by the Department of Defense (DoD) reveals a consistent requirement for these items to support military personnel and operations. While specific figures fluctuate year-to-year based on operational needs and contract awards, the overall trend indicates sustained procurement. The $41.4 million awarded to BAXTERS NORTH AMERICA, INC. from 2010 to 2020 represents a significant, but not necessarily anomalous, portion of this spending over that period. Analyzing broader defense logistics spending patterns shows that food and subsistence procurement is a perennial requirement, often managed through large, multi-year contracts to ensure supply chain stability and achieve economies of scale. The Defense Logistics Agency (DLA) is the primary entity responsible for these procurements, often utilizing competitive bidding processes to secure goods at favorable prices.

How does the per-unit cost of this contract compare to commercial market rates for canned goods?

Determining the precise per-unit cost for comparison is challenging without detailed line-item data from the contract, which is not publicly available. The contract value of $41.4 million over approximately 3,442 days (roughly 9.4 years) averages to about $4.4 million annually. This figure encompasses a wide variety of canned fruits and vegetables, potentially including specialized packaging or requirements for military specifications. Commercial market rates vary significantly based on product type, brand, volume, and packaging. However, given the large volumes typically procured by the military and the firm fixed-price nature of the contract, it is plausible that the per-unit costs were negotiated to be competitive, potentially even lower than retail prices for equivalent quality and quantity due to bulk purchasing power. Without specific product breakdowns, a direct per-unit comparison remains speculative.

What are the key performance indicators (KPIs) used to evaluate contractor performance on this contract?

Key Performance Indicators (KPIs) for a contract of this nature, supplying canned fruits and vegetables, would typically focus on several critical areas. These often include on-time delivery rates, ensuring that shipments arrive at designated military facilities by the required dates. Quality assurance is paramount, involving checks for product integrity, expiration dates, absence of damage, and adherence to specified nutritional content and ingredient lists. Order accuracy, ensuring the correct items and quantities are delivered, is another vital KPI. Furthermore, compliance with food safety regulations and handling procedures would be rigorously monitored. While specific KPIs are usually detailed in the contract's Performance Work Statement (PWS), these general areas are standard for ensuring the reliable provision of essential subsistence items to the armed forces.

What is the track record of BAXTERS NORTH AMERICA, INC. in fulfilling government contracts, particularly for food supplies?

BAXTERS NORTH AMERICA, INC. has a history of fulfilling government contracts, including those related to food supplies. As a subsidiary of a larger international food group, the company possesses the scale and experience necessary for large-scale procurement. Publicly available data indicates past awards from various government agencies, including the Department of Defense, for subsistence items. While specific details on performance metrics for all past contracts are not always readily accessible, the continued awarding of contracts suggests a generally satisfactory performance history. Companies in this sector are typically subject to stringent quality and delivery standards, and sustained business with the government implies an ability to meet these requirements over time. Further detailed analysis would require examining specific contract performance reports if available.

What are the potential risks associated with a long-term (3442-day) contract for perishable or semi-perishable goods like canned foods?

Long-term contracts for goods like canned foods, while offering supply stability, do present specific risks. A primary concern is price volatility; the cost of raw agricultural products, energy, and transportation can fluctuate significantly over a period of nearly ten years. A firm fixed-price contract, like this one, protects the government from upward price adjustments but could strain the contractor if costs rise unexpectedly, potentially impacting their financial stability or willingness to maintain quality. Shelf-life management is another consideration; ensuring that the canned goods remain within their usable lifespan upon delivery and throughout their storage at military facilities requires careful inventory management and rotation. Furthermore, changes in dietary guidelines, military operational needs, or the availability of alternative food sources could arise over such an extended period, potentially making the contracted items less relevant or desirable.

Industry Classification

NAICS: Manufacturing › Fruit and Vegetable Preserving and Specialty Food Manufacturing › Fruit and Vegetable Canning

Product/Service Code: SUBSISTENCE

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: DDJ Capital Management, LLC (UEI: 964928402)

Address: 4701 CREEK RD STE 200, CINCINNATI, OH, 90

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $41,430,556

Exercised Options: $41,430,556

Current Obligation: $41,430,556

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SPM3S106DZ105

IDV Type: IDC

Timeline